The government said Tuesday that Japan’s jobless rate climbed to 4.7 percent in July, up 0.1 percent from a month earlier, while household spending fell a real 2.1 percent to 280,046 yen ($3,649).
While a jobless rate of 4.7 percent seems relatively low considering that the U.S.’s unemployment rate for July was 9.3 percent, this low percentage doesn’t represent the reality on the ground. The figures Tokyo released Tuesday did not account for Miyagi, Iwate or Fukushima prefectures, all severely hit by the March 11 quake and tsunami, where 100,000 people are still left without homes, and entire industries have been wiped out.
Another reason the numbers are misleading is that Tokyo keeps unemployment artificially low by spending trillions of dollars on public works projects (namely, pouring concrete everywhere) to avoid a full economic collapse. According to the New York Times, Tokyo spent $6.3 trillion on construction-related public investment between 1991 and 2008. This has kept the economy in a state of stagflation for 20 years while racking up world-record public debt. Considering that construction workers account for 11.4 percent of Japan’s work force (compared to 5.8 percent in the U.S.), without massive investment in the construction industry, Japan’s jobless numbers would be much higher.
According to Michael Zielenziger’s Shutting Out the Sun: How Japan Created Its Own Lost Generation, Tokyo fears large unemployment because unemployed people tend to be discontent while having loads of free time on their hands. These angry people could gather in their free time and protest against the government. According to STRATFOR’s Japan Monograph, “The Geopolitics of Japan: An Island Power Adrift,” maintaining a strong central government is a characteristic imperative of Japanese rulers, which could explain why Tokyo sees unemployment as a threat to its power. This may be why rather than risking temporarily high unemployment in the name of economic reform, leaders in Tokyo would rather use the public’s credit card to turn Japan into a public-works-based welfare state, spending money on projects with only short-term fiscal payoffs.
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